Bengt Holmström, a professor of economics at the Massachusetts Institute of Technology (MIT), says trade unions have become a hindrance to development in Finland.
Holmström on Wednesday told YLE that the strikes launched in response to a dispute between the government and trade unions over a proposal to make laying off easier for small businesses are indicative of a lack of understanding of the changing nature of work.
“Labour markets are the big problem,” he commented in an interview with the public broadcasting company.
“I think it’s selfish that the only ones who have a voice are those who’ve managed to become part of the system and stay part of it, whereas those who’re not members of a union or the unemployed, for example, don’t have a voice.”
Holmström, a co-winner of the 2016 Nobel Prize for Economics, added that if necessary the government must force trade unions to accept revisions to the terms and conditions of employment, such as allowing the hiring of immigrants on wages lower than the statutory minimum wage.
“It’s a major threat to the welfare state that trade unions are being defiant and demanding that all achieved benefits are preserved,” he stated. “I understand that the universally binding nature [of collective bargaining agreements] is important to them, but it may not be in the best interests of the nation.”
He also viewed that the ongoing dispute over the proposal to reduce employee protection against unilateral termination is “clearly” a question of principle, as the proposal itself is “trivial”.
“The government has probably thought that this is a fight that has to be had at some point. You have to do it by force, because I don’t believe there’ll be ever a day when trade unions announce they’ll relinquish their power,” he said.
Holmström has stated repeatedly that greater labour market flexibility is required not only to preserve the welfare state, but also to promote job creation and protect business owners in Finland.
Aleksi Teivainen – HT
Source: Uusi Suomi